Co-operation works… but know your limits

In the world of outsourcing, service providers have co-operated where necessary – i.e. when specifically asked to do so by potential clients – but there is very little co-operation in other circumstances.

I think this is wrong-headed and short-sighted.

Let’s say you were working for one of the best HR outsourcing businesses on the planet. You find you can compete against the other HRO firms on a like for like basis, but with more and more clients looking to make savings across the whole of their business, they want to combine HR with finance, oh, and will throw in a technology refresh too.

How are you going to compete against an IBM or Accenture turning up and saying “sure guv, no problems, we do all that and more – we’re the answer to your prayers mate!”?

Of course, the more sensible and mature clients are going down the multi-sourcing route, which is to your benefit, but I’m increasingly working on synergistic relationships between BPO and ITO firms before a client has specifically asked for it. There are several advantages to this approach, including:

1. The cost of sale for each party goes down and,
2. Each firm’s margins are strengthened because they are concentrating on what they’re really good at

There is the obvious issue of governance to consider (and I will be looking at that in another blog), but in the current economic climate, this type of arrangement could and should lead to more positive outcomes for clients and service providers alike.

Change the DNA, change the beast

Following a meeting at Reform last week, several suggestions came out: (as Reform runs under the Chatham House rule, I can’t say who said what, but I can give you a flavour).

1. Those who run political initiatives are not asked to justify the routine costs of governing
2. There is a huge issue with the cultural DNA differences between public and private sectors in terms of reviewing
3. The public sector is very diverse and diluted and although devolution is a key driver for change, the “it’s our money and we’ll decide how to spend it” mentality is alive and well in government departments

I’ll leave the recommendations to come from the authors of a paper due out in the next couple of weeks. Nevertheless there are a couple of points I think are worth raising now.

1. Government needs to push service delivery as far as possible to the private sector and offer contracts to local/national  businesses to enhance the local economy, notwithstanding the need to comply with EU competition law
2. The government should become both the commissioner of services and the quality assurance auditor, to ensure efficiency and cost-effectiveness
3. There is a need to build a vehicle which could be a consortium or joint venture between government and one or several private sector partners that will administer the transformation and contracts to service providers

I’m having a follow-up meeting tomorrow to discuss this in more detail, but I believe that only by changing the DNA of the public sector, can we change the beast.

No option is off the table

Local governments are considering the best operating model for post CSR10. Councils have already tried a technology-led approach which involves re-platforming the disparate systems and from that, undertaking business process reengineering to deliver efficiencies in operational departments enabled by the new systems.

A second iteration on this theme is to outsource back office functions to deliver savings in finance and accounting, human resources, procurement etc. However, with the likelihood of cuts of up to 30% in central government grant aid from 2011, this shaving the parmesan approach is untenable.

I’ve been working on a possible solution, but I need input. What are the solutions; the more radical the better? Start the debate.

Why would I want to co-operate?

Increasingly a closer, more reciprocal relationship between the outsourcing provider and third party advisor is required that ensures stronger governance and accountability. In this more heterogeneous environment, the advisor acts as a trusted advisor to the client, stringently reviewing the providers’ performance and ensuring that the outsourcing contract is open, honest and much less likely to fail. This development will prevent outsourcing suppliers taking on work they don’t have the necessary expertise and capacity to carry out.

I wrote this for an article coming out next month. Now if only some of the major outsourcing providers would take notice…

The rebirth of bpobackchat

Death by a thousand cuts is nothing in comparison with death by a thousand absences. bpobackchat.com is dead and has been for a couple of years. Long live bpobackchat on wordpress – also available on LinkedIn.